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Study: Oil speculators costing drivers $41 extra per month

A new reports says oil market speculators drive up gas prices by about 83 cents per gallon, which amounts to $41 more per month from the pocket of the typical U.S. driver, SFGate reports.

From the story:

Two researchers from the University of Massachusetts, Amherst, looked at this spring’s spike in gasoline prices and tried to filter out the effects of speculative traders – those who buy and sell oil futures strictly as an investment.

To do so, they took oil prices from the last five years, averaged out the highs and lows to show the long-term trend, projected the long-term trend forward, and compared the results to predictions from the U.S. Energy Information Administration. Then they converted the price of oil to the price of gasoline, after analyzing how closely the two prices matched each other over the last decade.

The result: In May, when the nationwide average for a gallon of regular gas peaked just below $4, speculators added about 83 cents to the total price, according to researchers Robert Pollin and James Heintz. Remove speculators from the market, and gasoline would have topped out around $3.13.

The effect is a $1 billion drag on the economy, the study concludes.

The Federal Trade Commission also is investigating what role producers, refiners, retailers and others might have had in this year’s sudden spike in gas prices, Washington Sen. Maria Cantwell announced last week. It is the first time the FTC has used a new law authored by Cantwell, which makes it a crime to manipulate wholesale oil markets, according to a news release.

“Americans deserve to know what’s really behind the rapid increase in gas prices burdening families and businesses,” she said in the news release. “Bad actors who are artificially driving up gas prices ought to be brought to justice and face stiff punishment. I am pleased the FTC is using this new authority to protect consumers. The American public deserves to have aggressive policing of these markets and for the FTC to enforce these new laws.”

Note: This is a seattlepi.com reader blog. It is not written or edited by the P-I. The authors are solely responsible for content. E-mail us at newmedia@seattlepi.com if you consider a post inappropriate.